UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549
_______________________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of report (Date of earliest event reported) April 23, 2015
_______________________
MERITAGE HOMES CORPORATION
(Exact Name of Registrant as Specified in Charter)
 
 
 
 
 
 
 
 
Maryland
 
1-9977
 
86-0611231
(State or Other Jurisdiction
of Incorporation)
 
(Commission File
Number)
 
(IRS Employer
Identification No.)
 
           8800 E. Raintree Drive, Suite 300, Scottsdale, Arizona 85260
 
 
(Address of Principal Executive Offices) (Zip Code)
 
 
 
 
 
(480) 515-8100
 
 
(Registrant’s telephone number, including area code)
 
 
 
 
 
 
 
 
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
   o   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
   o   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
   o   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
   o   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 





ITEM 2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION
On April 23, 2015, we announced in a press release information concerning our results for the quarterly period ended March 31, 2015. A copy of this press release, including information concerning forward-looking statements and factors that may affect our future results, is attached as Exhibit 99.1. This press release is being furnished, not filed, under Item 2.02 in this Report on Form 8-K.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(d) Exhibits
99.1 Press Release dated April 23, 2015






SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Dated: April 23, 2015
 

MERITAGE HOMES CORPORATION
 
 
/s/
Larry W. Seay
By:
Larry W. Seay
 
Executive Vice President and Chief Financial Officer







Exhibit 99.1
 
 
 
 
 
 
 
 
 
 
Contacts:
Brent Anderson, VP Investor Relations
 
 
 
 
(972) 580-6360 (office)
 
 
 
 
Brent.Anderson@meritagehomes.com

Meritage Homes Reports Results for the First Quarter of 2015
Total order value increased 41% over 2014 with a 30% increase in orders
First quarter home closing revenue increased 27% on a 20% increase in home closings
Management anticipates strong growth for full-year 2015 orders, closing revenue and earnings

SCOTTSDALE, Ariz., April 23, 2015 - Meritage Homes Corporation (NYSE: MTH), a leading U.S. homebuilder, announced today first quarter results for the period ended March 31, 2015.
Summary Operating Results (unaudited)
(Dollars in thousands, except per share amounts)
 
    
 
 
Three Months Ended March 31,
 
 
2015
 
2014
 
%Chg
Homes closed (units)
 
1,335

 
1,109

 
20
 %
Home closing revenue
 
$
517,273

 
$
405,779

 
27
 %
Average sales price - closings
 
$
387

 
$
366

 
6
 %
Home orders (units)
 
1,979

 
1,525

 
30
 %
Home order value
 
$
782,812

 
$
555,040

 
41
 %
Average sales price - orders
 
$
396

 
$
364

 
9
 %
Ending backlog (units)
 
2,758

 
2,269

 
22
 %
Ending backlog value
 
$
1,111,991

 
$
835,933

 
33
 %
Average sales price - backlog
 
$
403

 
$
368

 
10
 %
Net earnings
 
$
16,400

 
$
25,377

 
(35
)%
Diluted EPS
 
$
0.40

 
$
0.62

 
(35
)%




1



MANAGEMENT COMMENTS
“We achieved strong growth in the first quarter of 2015 over 2014 in many of our operating metrics, including orders, closing revenue and ending backlog value, increasing our confidence in meeting or exceeding our plan for the year,” said Steven J. Hilton, chairman and chief executive officer of Meritage Homes. "We are now projecting 25-30% growth in home closing revenue for the year, with estimated earnings of $3.75-4.00 per diluted share being heavily weighted to the back half of 2015, after our actual $0.40 per diluted share in the first quarter and our estimate of $0.64-0.68 earnings per diluted share for the second quarter.
“Our home closing revenue for the first quarter of 2015 increased 27% over the prior year, with the majority of that increase coming from our newer markets in the East region, including the new markets we entered through our acquisition of Legendary Communities in the third quarter of 2014,” said Mr. Hilton.
“Our first quarter home closing gross margin declined to 18.5% in 2015 from 22.8% in 2014. Most of that decline was anticipated due to higher lot costs and less home price appreciation during the last year -- as we projected over a year ago and have been experiencing for several quarters. Approximately 40 bps of the decline was attributable to the negative impact of purchase-accounting adjustments on closings of Legendary's homes,” he explained. “A shift in the mix of closings also contributed to the decline. We believe our home closing gross margin will increase over the course of the year to achieve our previous projection of approximately 20% for the year.”
Mr. Hilton continued, “The spring selling season kicked off early this year and our first quarter 2015 orders reflected stronger-than-expected demand, in addition to the benefit of our strategic expansion into several top homebuilding markets over the last few years. We had 21% more actively selling communities in the first quarter than a year ago, which put us in a better position to capture more sales as demand increased within our markets, resulting in 30% order growth for the first quarter of 2015 over 2014.
"We averaged 8.6 orders per community in 2015, compared to 8.1 in 2014. Our West region had the largest improvement in average sales pace, reaching 9.7 orders per community for the first quarter of 2015 compared to 8.0 in the first quarter of 2014, as demand strengthened in California, Colorado and Arizona. Despite fears about the impact of lower oil prices on the Texas economy, our Central region sales pace remained strong, with 9.3 average orders per community in the first quarter this year, compared to 8.6 a year ago, and Houston's sales pace was consistent with the prior year. Total orders and order value in our East region more than doubled over 2014, with increases of 68%, 81% and 41%, respectively in Florida, North Carolina and Tennessee's order value for the first quarter of 2015.
“With the benefit of a combination of a healthy backlog value 33% higher than a year ago, more actively selling communities and a stronger demand environment than last year, we expect to show continued growth in our 2015 orders and closings," explained Mr. Hilton. “Considering the robust sales in our higher-margin western markets so far this year, and an expected improvement in our East region’s home closing gross margins as our new divisions mature and the purchase accounting adjustments on Legendary's closings dissipate over the next two quarters, we expect our overall home closing gross margins to improve throughout the remainder of the year. We also expect strong revenue growth to yield additional overhead leverage, especially in our eastern markets, which should also improve our operating margins, especially in the third and fourth quarters."

2



FIRST QUARTER RESULTS
Net earnings of $16.4 million ($0.40 per diluted share) for the first quarter of 2015, compared to prior year net earnings of $25.4 million ($0.62 per diluted share), primarily reflects lower home closing margins on higher home closing revenues; and higher selling, general and administrative expenses.
Home closing revenue increased 27% due to a 20% increase in home closings combined with a 6% increase in average price over the prior year period. East region closing revenue increased by 64% (Florida, Georgia, the Carolinas and Tennessee), while the Central region (Texas) grew revenue by 29% and the West region (California, Colorado and Arizona) grew 8% over the first quarter of 2014.
Home closing gross margin was 18.5% for the first quarter of 2015 compared to 22.8% in the first quarter of 2014, reflecting higher land costs, fewer high-margin closings driven by rising home prices, a larger percentage of 2015 closings from less-mature and lower-margin divisions in the East region, and an approximate 40 bps negative impact on the company's total home closing gross margin due to purchase accounting adjustments on home closings from Legendary Communities, acquired in July of 2014.
First quarter orders increased 30% and the total value of homes ordered increased 41% with a 9% increase in average sales prices, which reached a company record level of $396,000 in the first quarter of 2015. First quarter orders of 557 homes in Texas were 12% lower than the prior year's total, with an 8% increase in average orders per community partially offsetting an 18% decline in actively selling communities caused by the sell-out of communities ahead of plan in 2014. Management expects to replace those communities throughout 2015. Texas's first quarter order value declined just 4% as the average sales price increased 10% over 2014.
Total active community count at quarter-end increased 21% in 2015 over 2014, primarily due to the July 2014 acquisition of Legendary Communities with operations in Georgia and South Carolina. Average orders per community also increased 6% to 8.6 in the first quarter of 2015 from 8.1 in the prior year.
Cancellation rates decreased to 11% in the first quarter of 2015 from 13% in the first quarter of 2014, reflecting stronger demand for homes.
Commissions and other selling expenses increased by 40 basis points to 8.0% of home closing revenue in the first quarter of 2015, compared to 7.6% in the first quarter of 2014, primarily reflecting additional start-up marketing costs associated with our newer markets.
General and administrative expenses for the first quarter of 2015 increased by 40 basis points to 5.7% of total closing revenue in 2015, compared to 5.3% of total closing revenue in 2014, reflecting the addition of two division offices from Legendary Communities in 2015 and an acceleration of expenses related to a change in vesting of equity awards for certain long-term senior executives and board members.
Interest expense increased 16% to $3.2 million, but declined to 0.6% of total closing revenue in the first quarter of 2015 from $2.7 million or 0.7% of total closing revenue in the first quarter of 2014. A smaller percentage of total interest incurred was capitalized to inventory as development was completed in several communities.
Earnings before income taxes declined to $25.3 million from $39.8 million in the first quarter of 2015 compared to 2014, respectively. Pretax margin of 4.9% for the first quarter of 2015 was lower than 9.7% in 2014 due to the combination of lower gross margins and lower overhead leverage in 2015.

3



BALANCE SHEET
Cash and cash equivalents at March 31, 2015, totaled $89.2 million, compared to $103.3 million at December 31, 2014. The company expanded its revolving credit facility capacity to $500 million in the first quarter of 2015.
Real estate assets increased by $65.4 million for the first quarter, ending at $1.94 billion at March 31, 2015, compared to $1.88 billion at December 31, 2014.
Meritage invested approximately $148.6 million to acquire and develop lots for new communities in growing markets, and put approximately 800 new lots under control during the first quarter of 2015.
Meritage ended the first quarter of 2015 with approximately 29,300 total lots under control, compared to approximately 25,800 total lots at March 31, 2014. The acquisition of Legendary Communities in July of 2014 accounted for most of the year-over-year increase in lots. Based on trailing twelve months closings, Meritage controlled a 4.8-year supply of lots at March 31, 2015, consistent with the prior year.
Net debt-to-capital ratio at March 31, 2015 remained within the Companys stated target range at 43.6%, compared to 42.9% at December 31, 2014.
CONFERENCE CALL
Management will host a conference call today (April 23, 2015) to discuss the Company's results at 10:30 a.m. Eastern Time (7:30 a.m. Arizona Time). The call will be webcast with an accompanying slideshow available on the "Investor Relations" page of the Company's web site at http://investors.meritagehomes.com. Telephone participants may avoid any delays by pre-registering for the call using the following link to receive a special dial-in number and PIN.
Conference Call registration link: http://dpregister.com/10062827.
Telephone participants who are unable to pre-register may dial in to 866-226-4948 on the day of the call. International dial-in number is 1-412-902-4125 or 1-855-669-9657 for Canada.
A replay of the call will be available until May 8, beginning at 12:00 p.m. ET on April 23, 2015 on the website noted above, or by dialing 877-344-7529, 1-412-317-0088 for international or 1-855-669-9658 for Canada, and referencing conference number 10062827.
For more information, visit investors.meritagehomes.com.





4




Meritage Homes Corporation and Subsidiaries
Consolidated Income Statements
(Unaudited)
(In thousands, except per share data)
 
 
 
 
Three Months Ended March 31,
 
 
 
2015
 
2014
Homebuilding:
 
 
 
 
 
Home closing revenue
 
$
517,273

 
$
405,779

 
Land closing revenue
 
1,439

 
2,566

 
Total closing revenue
 
518,712

 
408,345

 
Cost of home closings
 
(421,786
)
 
(313,180
)
 
Cost of land closings
 
(1,285
)
 
(3,593
)
 
Total cost of closings
 
(423,071
)
 
(316,773
)
 
Home closing gross profit
 
95,487

 
92,599

 
Land closing gross profit/(loss)
 
154

 
(1,027
)
 
Total closing gross profit
 
95,641

 
91,572

Financial Services:
 
 
 
 
 
Revenue
 
2,535

 
1,899

 
Expense
 
(1,299
)
 
(1,075
)
 
Earnings from financial services unconsolidated entities and other, net
 
2,544

 
2,201

 
Financial services profit
 
3,780

 
3,025

Commissions and other sales costs
 
(41,612
)
 
(30,934
)
General and administrative expenses
 
(29,650
)
 
(21,671
)
Loss from other unconsolidated entities, net
 
(123
)
 
(169
)
Interest expense
 
(3,154
)
 
(2,713
)
Other income, net
 
415

 
648

Earnings before income taxes
 
25,297

 
39,758

Provision for income taxes
 
(8,897
)
 
(14,381
)
Net earnings
 
$
16,400

 
$
25,377

 
 
 
 
 
Earnings per share:
 
 
 
 
 
Basic
 
 
 
 
 
Earnings per share
 
$
0.42

 
$
0.66

 
Weighted average shares outstanding
 
39,390

 
38,687

 
Diluted
 
 
 
 
 
Earnings per share
 
$
0.40

 
$
0.62

 
Weighted average shares outstanding
 
41,948

 
41,308





5





Meritage Homes Corporation and Subsidiaries
Consolidated Balance Sheets
(In thousands)
(unaudited)
 
 
 
March 31, 2015
 
December 31, 2014
Assets:
 
 
 
 
Cash and cash equivalents
 
$
89,245

 
$
103,333

Other receivables
 
61,515

 
56,763

Real estate (1)
 
1,943,055

 
1,877,682

Real estate not owned
 

 
4,999

Deposits on real estate under option or contract
 
91,922

 
94,989

Investments in unconsolidated entities
 
10,271

 
10,780

Property and equipment, net
 
33,826

 
32,403

Deferred tax asset
 
64,711

 
64,137

Prepaids, other assets and goodwill
 
71,913

 
71,052

Total assets
 
$
2,366,458

 
$
2,316,138

Liabilities:
 
 
 
 
Accounts payable
 
$
91,474

 
$
83,619

Accrued liabilities
 
141,175

 
154,144

Home sale deposits
 
32,771

 
29,379

Liabilities related to real estate not owned
 

 
4,299

Loans payable and other borrowings
 
61,406

 
30,722

Senior and convertible senior notes
 
904,344

 
904,486

Total liabilities
 
1,231,170

 
1,206,649

Stockholders' Equity:
 
 
 
 
Preferred stock
 

 

Common stock
 
396

 
391

Additional paid-in capital
 
548,182

 
538,788

Retained earnings
 
586,710

 
570,310

Total stockholders’ equity
 
1,135,288

 
1,109,489

Total liabilities and stockholders’ equity
 
$
2,366,458

 
$
2,316,138

(1) Real estate – Allocated costs:
 
 
 
 
Homes under contract under construction
 
$
419,324

 
$
328,931

Unsold homes, completed and under construction
 
251,840

 
302,288

Model homes
 
111,304

 
109,614

Finished home sites and home sites under development
 
1,160,587

 
1,136,849

Total real estate
 
$
1,943,055

 
$
1,877,682







6



Supplemental Information and Non-GAAP Financial Disclosures (Dollars in thousands – unaudited):
 
    
 
Three Months Ended March 31,
 
2015
 
2014
Depreciation and amortization
$
3,211

 
$
2,513

 
 
 
 
Summary of Capitalized Interest:
 
 
 
Capitalized interest, beginning of period
$
54,060

 
$
32,992

Interest incurred
15,282

 
14,256

Interest expensed
(3,154
)
 
(2,713
)
Interest amortized to cost of home and land closings
(9,345
)
 
(5,834
)
Capitalized interest, end of period
$
56,843

 
$
38,701

 
 
 
 
 
March 31, 2015
 
December 31, 2014
Notes payable and other borrowings
$
965,750

 
$
935,208

Stockholders' equity
1,135,288

 
1,109,489

Total capital
2,101,038

 
2,044,697

Debt-to-capital
46.0
%
 
45.7
%
 
 
 
 
Notes payable and other borrowings
$
965,750

 
$
935,208

Less: cash and cash equivalents
(89,245
)
 
(103,333
)
Net debt
876,505

 
831,875

Stockholders’ equity
1,135,288

 
1,109,489

Total net capital
$
2,011,793

 
$
1,941,364

Net debt-to-capital
43.6
%
 
42.9
%
 



7



Meritage Homes Corporation and Subsidiaries
Consolidated Statements of Cash Flows 
(In thousands) (unaudited)
 
 
Three Months Ended March 31,
 
 
2015
 
2014
Cash flows from operating activities:
 
 
 
 
Net earnings
 
$
16,400

 
$
25,377

Adjustments to reconcile net earnings to net cash used in operating activities:
 
 
 
 
Depreciation and amortization
 
3,211

 
2,513

Stock-based compensation
 
4,630

 
2,411

Excess income tax benefit from stock-based awards
 
(1,935
)
 
(2,275
)
Equity in earnings from unconsolidated entities
 
(2,421
)
 
(2,032
)
Distribution of earnings from unconsolidated entities
 
3,035

 
3,955

Other
 
(490
)
 
4,118

Changes in assets and liabilities:
 
 
 
 
Increase in real estate
 
(58,906
)
 
(132,536
)
Decrease/(increase) in deposits on real estate under option or contract
 
3,767

 
(3,071
)
Increase in receivables, prepaids and other assets
 
(5,695
)
 
(13,998
)
Decrease in accounts payable and accrued liabilities
 
(3,179
)
 
(15,813
)
Increase in home sale deposits
 
3,392

 
1,839

Net cash used in operating activities
 
(38,191
)
 
(129,512
)
Cash flows from investing activities:
 
 
 
 
Investments in unconsolidated entities
 
(104
)
 
(44
)
Purchases of property and equipment
 
(4,589
)
 
(6,995
)
Proceeds from sales of property and equipment
 
44

 
93

Maturities of investments and securities
 

 
47,533

Payments to purchase investments and securities
 

 
(35,514
)
Net cash (used in)/provided by investing activities
 
(4,649
)
 
5,073

Cash flows from financing activities:
 
 
 
 
Proceeds from Credit Facility, net
 
27,000

 

Repayment of loans payable and other borrowings
 
(3,017
)
 
(2,155
)
Proceeds from issuance of common stock, net
 

 
110,432

Excess income tax benefit from stock-based awards
 
1,935

 
2,275

Proceeds from stock option exercises
 
2,834

 
707

Net cash provided by financing activities
 
28,752

 
111,259

Net decrease in cash and cash equivalents
 
(14,088
)
 
(13,180
)
Beginning cash and cash equivalents
 
103,333

 
274,136

Ending cash and cash equivalents (2)
 
$
89,245

 
$
260,956

 
(2) Ending cash and cash equivalents excludes investments and securities of $77.7 million as of March 31, 2014 .

8



 
 
 
 
 
 
 
 
 
Meritage Homes Corporation and Subsidiaries
Operating Data
(Dollars in thousands) (unaudited)
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31, 2015
 
March 31, 2014
 
 
Homes
 
Value
 
Homes
 
Value
Homes Closed:
 
 
 
 
 
 
 
 
Arizona
 
186

 
$
62,601

 
211

 
$
71,782

California
 
153

 
86,423

 
165

 
79,927

Colorado
 
128

 
57,854

 
89

 
39,922

West Region
 
467

 
206,878

 
465

 
191,631

Texas
 
440

 
152,587

 
403

 
118,199

Central Region
 
440

 
152,587

 
403

 
118,199

Florida
 
177

 
72,831

 
163

 
67,098

Georgia
 
52

 
15,458

 

 

North Carolina
 
89

 
34,975

 
55

 
22,579

South Carolina
 
76

 
24,560

 

 

Tennessee
 
34

 
9,984

 
23

 
6,272

East Region
 
428

 
157,808

 
241

 
95,949

Total
 
1,335

 
$
517,273

 
1,109

 
$
405,779

Homes Ordered:
 
 
 
 
 
 
 
 
Arizona
 
288

 
$
90,591

 
228

 
$
75,647

California
 
310

 
178,097

 
237

 
120,052

Colorado
 
189

 
85,407

 
124

 
54,758

West Region
 
787

 
354,095

 
589

 
250,457

Texas
 
557

 
185,132

 
634

 
192,231

Central Region
 
557

 
185,132

 
634

 
192,231

Florida
 
248

 
108,857

 
173

 
64,616

Georgia
 
77

 
24,218

 

 

North Carolina
 
148

 
61,625

 
81

 
34,019

South Carolina
 
96

 
29,528

 

 

Tennessee
 
66

 
19,357

 
48

 
13,717

East Region
 
635

 
243,585

 
302

 
112,352

Total
 
1,979

 
$
782,812

 
1,525

 
$
555,040

 
 
 
 
 
 
 
 
 
Order Backlog:
 
 
 
 
 
 
 
 
Arizona
 
294

 
$
94,208

 
295

 
$
101,104

California
 
369

 
215,637

 
297

 
147,588

Colorado
 
329

 
149,186

 
237

 
107,220

West Region
 
992

 
459,031

 
829

 
355,912

Texas
 
975

 
341,586

 
1,023

 
319,687

Central Region
 
975

 
341,586

 
1,023

 
319,687

Florida
 
308

 
138,596

 
218

 
86,790

Georgia
 
78

 
25,344

 

 

North Carolina
 
244

 
94,818

 
134

 
54,658

South Carolina
 
90

 
31,088

 

 

Tennessee
 
71

 
21,528

 
65

 
18,886

East Region
 
791

 
311,374

 
417

 
160,334

Total
 
2,758

 
$
1,111,991

 
2,269

 
$
835,933



9



Meritage Homes Corporation and Subsidiaries
Operating Data
(unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
March 31, 2015
 
March 31, 2014
 
 
Beg.
 
End
 
Beg.
 
End
Active Communities:
 
 
 
 
 
 
 
 
Arizona
 
41

 
44

 
40

 
41

California
 
24

 
21

 
22

 
17

Colorado
 
17

 
16

 
14

 
13

West Region
 
82

 
81

 
76

 
71

Texas
 
59

 
61

 
70

 
77

Central Region
 
59

 
61

 
70

 
77

Florida
 
29

 
26

 
20

 
17

Georgia
 
13

 
13

 

 

North Carolina
 
21

 
23

 
17

 
18

South Carolina
 
20

 
20

 

 

Tennessee
 
5

 
5

 
5

 
6

East Region
 
88

 
87

 
42

 
41

Total
 
229

 
229

 
188

 
189

 
 
 
 
 
 
 
 
 



10



About Meritage Homes Corporation
Meritage Homes is the eighth-largest public homebuilder in the United States, based on homes closed in 2014. Meritage builds and sells single-family homes for first-time, move-up, luxury and active adult buyers across the Western, Southern and Southeastern United States. Meritage builds in markets including Sacramento, San Francisco's East Bay, the Central Valley and Orange County, California; Houston, Dallas-Ft. Worth, Austin and San Antonio, Texas; Phoenix/Scottsdale, Green Valley and Tucson, Arizona; Denver and Fort Collins, Colorado; Orlando and Tampa, Florida; Raleigh and Charlotte, North Carolina; Greenville-Spartanburg and York County, South Carolina; Nashville, Tennessee and Atlanta, Georgia.
Meritage has designed and built more than 85,000 homes in its 30-year history, and has a reputation for its distinctive style, quality construction, and positive customer experience. Meritage is the industry leader in energy-efficient homebuilding and has received the U.S. Environmental Protection Agency's ENERGY STAR Partner of the Year for Sustained Excellence Award in 2013, 2014 and 2015, for innovation and industry leadership in energy efficient homebuilding. Meritage was the first national homebuilder to be 100 percent ENERGY STAR qualified in every home it builds, and far exceeds ENERGY STAR standards today.
For more information, visit investors.meritagehomes.com.
This press release and the accompanying comments during our analyst call contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include management's expectations for growth in 2015 orders, closings and revenue, improved gross margins and operating margins, and projected earnings per share for the second quarter and full year 2015.
Such statements are based upon the current beliefs and expectations of Company management, and current market conditions, which are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. The Company makes no commitment, and disclaims any duty, to update or revise any forward-looking statements to reflect future events or changes in these expectations. Meritage's business is subject to a number of risks and uncertainties. As a result of those risks and uncertainties, the Company's stock and note prices may fluctuate dramatically. These risks and uncertainties include, but are not limited to, the following: the availability of finished lots and undeveloped land; interest rates and changes in the availability and pricing of residential mortgages; fluctuations in the availability and cost of labor; changes in tax laws that adversely impact our homebuyers; the ability of our potential buyers to sell their existing homes; cancellation rates and home prices in our markets; weakness in the homebuilding market resulting from an unexpected setback

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in the current economic recovery due to lower oil prices or other factors; inflation in the cost of materials used to develop communities and construct homes; the adverse effect of slower order absorption rates; potential write-downs or write-offs of assets; a change to the feasibility of projects under option or contract that could result in the write-down or write-off of option deposits; our ability to successfully integrate acquired companies and achieve anticipated benefits from these acquisitions; our potential exposure to natural disasters; competition; construction defect and home warranty claims; adverse legal rulings; our success in prevailing on contested tax positions; our ability to obtain performance bonds in connection with our development work; the loss of key personnel; our failure to comply with laws and regulations; limitations of our geographic diversification; fluctuations in quarterly operating results; our financial leverage and level of indebtedness and our ability to take certain actions because of restrictions contained in the indentures for our senior notes and our ability to raise additional capital when and if needed; our credit ratings; successful integration of future acquisitions; our compliance with government regulations and the effect of legislative or other initiatives that seek to restrain growth of new housing construction or similar measures; acts of war; the replication of our "Green" technologies by our competitors; our exposure to information technology failures and security breaches; and other factors identified in documents filed by the company with the Securities and Exchange Commission, including those set forth in our Form 10-K for the year ended December 31, 2014 under the caption "Risk Factors," which can be found on our website.




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